US managers wanted

Ron Resnick (
Wed, 02 Sep 1998 18:44:10 -0400

(This is an Israeli business magazine. The column deals with
the phenomenon of Israeli tech startups hiring US executives
in order to better place themselves in the all-important=20
American market. I assume this phenomenon occurs for hot
tech startup countries like Singapore, India, etc. too.)

The part I resonated to most was:

>Israeli entrepreneurs, says Abrams, are not an
>easy bunch. He has even talked to American
>tech executives who say outright that they won=92t
>work with Israelis. "This is not anti-Semitism,"
>he says. "It's experience. They find them (the
>Israelis) too rude and too wild for their taste."=20

I'll say. It's not just Israeli entrepreneurs - it's Israelis
in general. Sabras (local slang for indigenous Israelis) take
great pride in their coarse prickliness. They're tough HEROES,
who made it through combat divisons in the army, including
service in Gaza and Lebanon, and now do their
miluim (reserve duty) every year - what foreigner is gonna
tell THEM how to run their business? Too rude and too wild.
I won't argue that.

Sorry for the crappy formatting - I just scrunged it off the webpage.

High Tech Features=20

High Tech Drifters=20

By Michael Eilan=20

We all know the story. One, two or three smart
people with a big idea and bigger ambitions get
other people to believe in them, big money to
back them, and a market mostly full of
Americans who do not necessarily believe that
the big idea is so hot. The bugles then sound
and the call goes out "to bring in American
managers," because they, we fervently believe,
can do the job Israelis can't handle.=20

Then some smarter people have a better idea.
Let's hire the Americans before we get into
trouble, not after. So they go out and hire the
best they can, and sometimes it works, and
sometimes it doesn't.=20

The issue is actually far more complicated.
Usually, only large companies have a set-up
capable of handling multi-cultural business
development, and a wide enough margin of
safety to be able to pick up the pieces if it
doesn't work out. Most of those Israeli start-ups
that do seek American managers have neither.
The American executives they hire are
extremely expensive, and quite often the fate of
a young technology company rests on whether
it has chosen wisely, and on how compatible
the Americans are with the point person next to
the market.=20

Of course not all Israeli companies want to hire
Americans, or even need to. Some do very well
with a pure Israeli team, learning as they go
along that most of the world thinks and acts a
bit differently, and that one has to respect these
differences to do business.=20

But there is a growing number of companies,
principally Information Technology companies
focused on markets developing at very high
speed, that know in their gut that this
evolutionary approach won't work because their
chances of success depend on the speed of
their impact. Sometimes they embrace the new
creed too much. Ofer Segev of Kost Forer and
Gabai, who has been following high tech
companies for years, thinks that too often the
venture capital backers of start-ups urge them to
take on more senior staff than they really need.=20

The question is less about the need, and more
about how many senior executives are needed
and how they are best hired. These problems
will be addressed at a forthcoming seminar, The
Second Annual Venture Capital - High-Tech
Entrepreneur Journey (September 2nd, 1998 -
Tel Aviv Dan Panorama Hotel). This is a delicate
area where cultural differences can make or
break a company. It was interesting to hear the
American perspective from Bruce Abrams, a
headhunter who has specialized in finding
American executives for Israeli firms. Abrams
works for Christian and Timbers, an American
executive placement firm that will take part in
the seminar.=20

Israeli entrepreneurs, says Abrams, are not an
easy bunch. He has even talked to American
tech executives who say outright that they won=92t
work with Israelis. "This is not anti-Semitism,"
he says. "It's experience. They find them (the
Israelis) too rude and too wild for their taste."=20

The Israeli perspective can be no less happy.
Hardly anybody wants to admit failure outright
but there are numerous stories in the market
about marriages with American executives who
spent crazy amounts of money achieving
negligible results.=20

It takes a special kind of American, says
Abrams, to work with Israelis. "They have to be
really smart and very aggressive to survive
Israelis." The job is difficult. The American
executives are usually in charge of marketing
and selling the Israeli company=92s goods. Most of
the markets that start-ups target are new
markets with ferocious competition. Everything,
from the product, to positioning, to packaging,
has to be open to change at this and
subsequent stages. The American executive
has to know the industry well enough to
recognize the necessary changes, and to have
enough credibility and authority with the people
back in Israel to ensure that these changes are
carried out at the speed that the markets

There are cultural keys that are also a problem.
Americans, for example have to understand that
when Israelis say it will be OK they quite often
mean the opposite. Israelis, for their part, have
to learn that when Americans have some valid
criticism they do not always present it in the
tight confrontational style that can get through
an Israeli entrepreneur's notoriously thick skin.=20

The American hiring strategy is also very
expensive. Abrams said that an American CEO
with the kind of experience Israelis are seeking
will demand, and get, $250,000 a year and
options for five to 10 percent of the company. A
vice president for sales and marketing can
command $200,000 and two to three percent in
options. When you add the support staff and
other costs, its easy to see how Israelis are
betting their company on their choices of

With all of these problems why hire American?
Zvi Lapidoth, general manager at Foxcom, which
is going through rapid expansion at the moment,
says that American managers have a definite
advantage when it comes to addressing the
American market. It's not only the highly
important network of contacts they have, but
also the knowledge of how to structure an
organization headed towards rapid expansion.
As many of us know, many Israeli start-ups are
an organizational mess, held together by the
nervous energy of the entrepreneur and a
common dedication to the big idea on the part of
a core group of staff members, who may have
known one another for years. The anonymity of
American business culture, which considerably
disturbs many Israelis, because it assumes that
anybody is replaceable, means things can be
made to run on less inspiration.=20

There are several different models. The most
basic model calls for hiring an American Vice
President for sales and marketing. Nearly every
Information Technology company that can afford
it has done that. Others, like Exaact, hire an
American CEO who runs the company the
entrepreneur founded. Yet others go the whole
hog, like IPHighway, which last week hired three
American Vice Presidents and is looking for an
American CEO, leaving only the technology to
Israelis. Another model calls for hiring a
President for an American subsidiary, like
Deborah Triant at Checkpoint, and sending one
of the Israeli entrepreneurs to the US to get
essential feedback from the market.=20

Assuming that one can find the right American
executive, who can handle the Israeli
temperament, knows the market, and knows
how to work, there is another problem, which
Segev says is fairly frequent. Israeli founders
just don't let the Americans do their job of
managing. Second-guessing from thousands of
miles away a sure remedy for destruction.=20

The advantage that many Israeli start-ups have
over American competitors is that they are often
started by two, three, or even four entrepreneurs,
compared to the usual solo act in the US. This
means that, ideally, one of the entrepreneurs
should move to the US to work with hired
American management and ensure the
combination of trust and oversight that are
essential for success.=20

The biggest disadvantage of American
executives, as Segev points out, is that they
often know very little about working in other
parts of the world. Because of the critical
importance of the US market, Israeli high tech
executives quite often have far more international
experience than their American peers. But if
Europe is really waking up as a high tech
market for Israel, as many people believe,
Israelis will have to start hiring Europeans. That
will probably be even more difficult, because the
cultural gap is even wider.=20

Published by Israel's Business Arena on August
30, 1998